A vendor management system (VMS) is a web-based application that acts as a mechanism for businesses to manage and procure staffing services (temporary and permanent) as well as outside contract or contingent labor. Typical features of a VMS application include order distribution, consolidated billing and significant enhancements in reporting capability that outperforms manual systems and processes.

Many of the contract positions I have applied for were for companies that used a VMS. It is popular with large companies looking for contractors for IT positions.

I asked my recruiter friend his opinion on VMS’s:

As for why a company would use a VMS, I can only speak from my experience with other big companies here in Detroit (GM, Ford, Chrysler) – unfortunately they all go by this model too. In a perfect world, the parent company will have another company act as a “vendor management system” or VMS. In theory (mind you, this is IN THEORY) the goal is to have a central group determine a vendor list, manage consistent pricing on all skill sets, send out all requirements to the qualified vendors on the vendor list, then track the metrics on those requirements – i.e. who is staffing the requirements the fastest at the best (cheapest) prices.

For example, I worked closely with Ford Motor in the early to mid-90’s. I had a lot of relationships with Ford hiring managers. Most of these Ford managers knew each other and would refer me around – but it was still impossible to meet everyone and know all the opportunities that were out there. What we (the vendor community) were sold on by the incoming VMS was that we’d have access to ALL the requirements at Ford, not just the pockets where you knew managers. The big sell back to Ford was that the VMS would manage all the stuff I mentioned above. Prior to the VMS, one manage might be paying $80/hr for a Java resource, while the next manager in another building might be paying $95/hr. Who was tracking this? No one really. Also, how did the managers know they were getting the best candidates at the best price? The more vendors they had to choose from, the bigger pool of talent and the better they could negotiate on rate. It eventually got to a point where the VMS would set a price before the requirement was broadcast to the vendor world. Then upwards of 30-50 resumes would get submitted and the manager had to wade through that stack to find the candidate they liked. Now, I read resumes all day because it is my job and it is the service I provide. I know ALL of these managers HATED it. The managers would eventually call their favorite and vendors back and say, hey, give me the cheat sheet and tell me which 2-3 candidates you submitted so I don’t have to read through 30+ resumes and conduct 15+ interviews (they don’t have that kind of time). The VMS doesn’t help in filtering or ranking the candidates, they just distribute, track, and report.

SO IN THEORY:

PROS:
- vendors get access to all requirements
- consistent/fair pricing for the parent company
- metrics to track which firms are performing best on speed and price (and these lists get updated quarterly. Some firms are booted and new firms are added on a pretty regular basis)

CONS:
- it puts all the filtering emphasis on the hiring manager (a MAJOR time suck)
- it creates a ton of paper work for the vendors (the submittal process is a pain in the ass – we eventually hired a full-time data entry person to just submit resumes all day)
- no real accountability when lousy resumes are submitted (the metrics take quarters to kick in, and it never stops the flow of lousy resumes)
- it removes (or tries to remove) all of the relationships between managers and trusted advisors
- margins are pushed down, so senior/good recruiters don’t bother with the business (see bullet #3 under CONS)
- AND THEY TAKE A CUT OF THE BILL RATE TO FUND THE VMS!

Does it work? Depends on who you ask. I have a client (non-automotive) that is trying to get me added to their vendor list because their VMS is churning out horrible resumes. I used to work directly with this firm about 5 years ago before the VMS was put in place. About four years ago they were purchased by Johnson & Johnson and forced to use Kelly Services as their VMS. Over the past 4 years they’ve grown tired of the terrible resumes. The managers that I know who still work there want local/smaller/accountable recruiting firms to give them the level of service that SAVES THEM TIME (the point you clearly recognize). So, the business side hates it, the IT side hates it… Who likes it? Accounting. And foreign national firms that don’t mind making a $3/hr margin jamming a bunch of crappy resumes into a VMS…

James is a big data and data warehousing technology specialist at Microsoft. He is a thought leader in the use and application of Big Data technologies, including MPP solutions involving hybrid technologies of relational data, Hadoop, and private and public cloud. Previously he was an independent consultant working as a Data Warehouse/Business Intelligence architect and developer. He is a prior SQL Server MVP with over 30 years of IT experience. James is a popular blogger (JamesSerra.com) and speaker, having presented at dozens of PASS events including the PASS Business Analytics conference and the PASS Summit. He is the author of the book “Reporting with Microsoft SQL Server 2012”. He received a Bachelor of Science degree in Computer Engineering from the University of Nevada-Las Vegas.